Question 1

What is the difference between Section 54, 54EC, and 54F exemptions?

Accepted Answer

**Section 54** applies when you sell a residential property and buy another residential property (limit: Rs 10 crore). **Section 54EC** allows exemption by investing in NHAI/REC bonds (limit: Rs 50 lakh, 5-year lock-in). **Section 54F** applies when you sell any capital asset (other than residential property) and invest in a residential property. Section 54F requires you to not own more than one residential house on the sale date.

Question 2

Can I claim exemption by purchasing two houses under Section 54?

Accepted Answer

Yes, but with conditions! If your LTCG is **Rs 2 crore or less**, you can purchase/construct **two residential houses** instead of one and still claim full exemption. This option is available **only once in a lifetime**. If LTCG exceeds Rs 2 crore, only one house qualifies for exemption.

Question 3

What is the Capital Gains Account Scheme (CGAS)?

Accepted Answer

If you cannot purchase or construct a new property before filing your ITR, you can deposit the LTCG amount in a **Capital Gains Account Scheme** with an authorized bank. This preserves your exemption claim. You must then utilize this amount for property purchase (within 2 years) or construction (within 3 years). Unutilized amounts become taxable in the year they are withdrawn or when the deadline expires.

Question 4

What is the maximum exemption limit under Sections 54 and 54F?

Accepted Answer

As per **Budget 2023**, the maximum capital gains exemption under Sections 54 and 54F is capped at **Rs 10 crore**. Any LTCG exceeding this amount will be taxable even if you invest the entire proceeds in a new property. For Section 54EC bonds, the maximum investment is **Rs 50 lakh** per financial year.

Question 5

What are the timelines for claiming capital gains exemption?

Accepted Answer

For **Sections 54 and 54F**: Purchase new property within **1 year before or 2 years after** the sale, or construct within **3 years** of sale. You cannot sell the new property for 3 years. For **Section 54EC**: Invest in NHAI/REC bonds within **6 months** of sale. The bonds have a 5-year lock-in period and cannot be pledged for loans.

Capital Gains Exemption (54/54EC/54F)

Quick answers

Related Calculators

Capital Gains Comprehensive

Tax Loss Harvesting

House Property Income Tax

NRI Capital Gains Tax Calculator

Home Loan EMI Calculator

Related Articles

Property Sale Capital Gains Tax: Complete Guide with Exemptions

Capital Gains Tax 2025: Key Changes & Calculator

Home Loan Tax Benefits: Section 24(b), 80C, 80EE & 80EEA

Related Tax Hacks

Section 54EC: The ₹50 Lakh Cap

CGAS Account Protection

Section 54 Two Properties

Joint Home Loan Doubling

Capital Gains Grandfathering

Need help with your calculation?